 In this method

 Profit shown by one set of accounts(either cost

or financial accounts)
 is taken as a Base Profit &
 items of difference are either added to it or
 Deducted from it to arrive at the figure of profit
shown by other set of accounts.
 Items of Expenditure included in cost accounts
but excluded from financial accounts.
 Items of Income included in financial accounts
but not shown in cost accounts.
 Over absorption of overheads in cost accounts.
 Amount by which closing stock is undervalued
in cost accounts
 Amount by which opening stock is overvalued
in cost accounts.
 Overcharge of depreciation in cost account.
 Amounts by which items of expenditure have
been shown in excess in cost accounts as
compared to the corresponding entries in
financial accounts.
 Items of Expenditure included in financial
accounts but excluded from cost accounts.
 Items of Income included in cost accounts but
not shown in financial accounts.
 Under absorption of overheads in cost
accounts.
 Amount by which closing stock is overvalued
in cost accounts
 Amount by which opening stock is
undervalued in cost accounts.
 Undercharge of depreciation in cost account.
 Amounts by which items of expenditure have
been shown in excess in financial accounts as
compared to the corresponding entries in cost
accounts.